The market for virtualization software is proving something of a conundrum for utility energy efficiency program managers, leading to the cancellation of incentive programs in California, and hesitation by utilities in other states to debut program offerings.
What’s the problem? Utilities are bound by program evaluation principles that prevent providing incentives for technologies that have reached market saturation, or in other words for technologies or measures that customers are implementing on their own without incentives.
So answering the question about market penetration becomes crucial for utilities and program evaluators, and in the case of virtualization, the market statistics paint a murky picture.
I’ve sourced two rather different pictures of the market. The first is a “virtualization industry quarterly survey” prepared by Vanson-Bourne, a market research company, and posted at V-Index.com.
Their latest data indicates that in the US in Q3 2011, over 43 percent of all servers are now virtual, and that almost ninety percent of the companies sampled expected to increase their use of virtualization in the future.
The 500 plus companies that Vanson-Bourne sampled are all “large-scale enterprises”, though significant portions of that sample are located outside of the US.
(Another interesting set of data from Vanson-Bourne indicates that most end users expected a ten-to-one or so consolidation ratio, but actually achieved on average more like five-to-one. A ratio that low would certainly yield far lower energy savings per project, and the move to newer, more efficient servers would become more of a driver of the savings.)
My second set of information comes from an informal survey done by the Natural Resources Defense Council under the leadership of Pierre Delforge, who is looking at the opportunity for energy efficiency gains in server rooms and closets.
These “distributed data centers” represent that vast majority of facilities, with an estimate of two and a half million compared to twenty thousand or so enterprise data centers. Market research indicates that almost sixty percent of the servers in use today are in these small facilities.
NRDC’s sample size was quite small (about ninety companies and institutions), and they don’t hold it up as a rigorous study, but their results are very interesting.
Of the organizations surveyed, only 37% had virtualized at least one server, and more starkly, less than a quarter expected to pursue additional virtualization projects.
Even combined, these two data sets paint an incomplete picture with regards to adoption rates of virtualization. You could certainly conclude that most big users have implemented some level of virtualization and are rapidly moving towards saturation levels.
You could also conclude that small and medium businesses have a much lower adoption rate, and are moving more slowly to make virtualization a standard practice.
What you can’t truly discern is the “squishy middle”: are large, sophisticated users adopting virtualization in their enterprise data centers, but not in their distributed IT infrastructure (server rooms and closets)?
So where does that leave utility programs? In the next post, we’ll look at California, and a design proposal for a utility program to promote virtualization in the distributed data center segment.